China prepares 'California-style' scheme for green cars

BEIJING (Reuters) - China is preparing a new scheme to encourage automakers and consumers to use electric and hybrid vehicles, learning lessons from California’s efforts to promote a similar switch, the head of a major state-owned carmaker said on Thursday.

The system will extend incentives to traditional gas-electric hybrids, often excluded from promotional programs in the past because that segment of the market was dominated by Japanese companies such as Toyota Motor Corp.

While the initiative is expected to benefit Chinese carmakers such as BYD Co and SAIC Motor Corp, which have stepped up production of traditional hybrids in recent years, global rivals are also positioned to take advantage of an expected increase in demand.

The likes of General Motors and Volkswagen (VOWG_p.DE) have already pledged to invest heavily in developing environmentally friendly vehicles for the Chinese market..

The proposed government scheme could be implemented in the first half of next year, said Xu Heyi, chairman of Beijing Automotive Group [BEJINS.UL], parent of BAIC Motor Corp.

China has set fuel economy standards that grow increasingly aggressive through 2020 to relieve heavy air pollution in much of the country, but it has yet to specify how such a plan will be enforced.

The new scheme to promote “new energy” cars, which generally refers to all-electric battery cars or heavily electrified plug-in hybrids, gives automakers credits for producing and selling such vehicles, helping them to meet new and more stringent fuel-economy rules.

“Relevant national departments are currently studying and drawing lessons from the U.S. state of California’s methods to encourage the use of new energy cars (to tackle vehicle emissions),” said Xu, who as leader of a major state-owned company is also a high-ranking Communist Party official.

There would be two schemes, one for automakers and one for consumers, to promote green cars in China, Xu told reporters at a media event at its Beijing headquarters.

Automakers would be given the most credits for making all-electric battery vehicles, fewer for plug-in hybrids and the least credits for traditional gasoline-electric hybrids.

Traditional gasoline cars that do not meet the new fuel economy requirements would get negative points, he said.

Carmakers failing to meet the new national fuel economy requirements could then buy credits from over-achieving companies to make up the difference.

Meanwhile, consumers would receive credits redeemable for money based on the distance they drive in full electric mode, with drivers using gasoline being required to pay an additional fee for the distance driven.